The Dutch Govt Explore The Opportunities of Blockchain

First must read article of 2018. Just before Christmas we mention that the Dutch government were working with a partner in the Netherlands to look at opportunities in the law. The following article published in OpenGov Asia highlights how the Dutch are exploring the technology across the board from tax to digital identity.

They write.

More than 30 pilots were concluded by November 2017. A variety of areas were covered, such as Income Tax, (digital) identity, logistics, autonomous vehicles and debt counselling.

Many governments around the world today are exploring how they can use blockchain technology to improve service delivery to citizens. The inherent characteristics of blockchain, its decentralised, distributed and transparent structure, the irreversibility and immutability of the transactions recorded on it, and high trust promise numerous benefits for public sector operations and efficiency.

The Dutch Government has also embarked on an exploratory journey into the world of blockchain, and its potential applications. On November 16, OpenGov attended a Blockchain Symposium in Singapore, where Koen Lukas Hartog, Program manager of Blockchainpilots.nl presented an overview of blockchain projects in the Dutch Government.

Blockchainpilots.nl was launched by the Dutch Public Service in the beginning of 2016 in order to establish the opportunities and threats of blockchain or distributed ledger technology. These projects are aimed at achieving two specific goals: 1) Enhance knowledge regarding blockchain within the participating organisations; and 2) Develop use cases for (future) application of blockchain technology.

The first round of pilot projects started in May of the same year. The participating governmental organisations developed a use case and/or a prototype in collaboration with one or more technical experts. Initially, the idea was to do three or four projects and then go back to the central government with the lessons learnt and recommendations on what the next steps should be.

Instead, more than 30 pilots were concluded during the time period from May 2016 to November 2017. A variety of topics and processes were covered, such as Income Tax, (digital) identity, logistics, autonomous vehicles and debt counselling. Typically for each project, over the course of three to four months, Blockchainpilots.nl would get together with a team of government experts on a particular process, and work towards a blockchain use case. The outcome would also include a roadmap towards the development of a first prototype.

“We didn’t do this alone, because I think the key ingredient of the success of our pilot projects is that we were able to create a large network of technical experts,” Mr. Hartog (above) said. University start-ups, IT companies and student networks were willing and able to work together with the government team and to help them figure out what blockchain is, what it could do for the organisation and the government as a whole, as well as what the first prototype should look like.

Many of those informal partnerships during the pilot projects are still in place, and have led to several working prototypes.

Examples of pilot projects

Mr. Hartog went on to discuss some of the pilot projects.

The Dutch Tax Agency is using blockchain to develop a better, more efficient, and more flexible system that wouldn’t duplicate data for the chain of stakeholders

The Dutch Ministry of Infrastructure and Water Management is currently developing a prototype for the process of transnational transport of toxic waste. It is a highly administrative process that involves several stakeholders who are duplicating work. They are planning to do a live demo and are hoping to launch an actual working product afterwards.

The Ministry of Justice and Security has explored several different blockchain projects at different agencies and services belonging to the Ministry.

For example, the judicial information service has looked into using blockchain for information sharing between stakeholders in criminal trial proceedings. The blockchain could provide irrefutable evidence to demonstrate who has access to what information at what moment, which could help during the trial phase.

If the lawyer in the court falsely tells the judge, that he/she has never seen this document before, and they need time to read and study it, it could lead to rescheduling the trial and additional costs incurred for the taxpayer. That kind of situation can be avoided with the incorporation of blockchain.

The Central Judicial Collection Agency (CJIB) has explored the use of blockchain for finding the ability of people to pay fines. CJIB) is legally authorised to collect outstanding fines directly from the bank account of Dutch residents. Agreements have been made with the banks on efficient execution of this law.

If a person cannot their bills, then in most cases, they would not be able to pay their government bills either. The problem is no one within the government knows that the individual is going through some problems like that. So, they will continue to send invoices or bills, that the person won’t be able to pay, and the total the amount due keeps getting higher and higher as penalties pile up. Because of privacy concerns information from different governmental organisations cannot be shared and this ends up amplifying people’s financial problems. The agency has now come up with a solution where they can use smart contracts and zero knowledge proof technology to find out if someone is unable to pay their bills, without having access to all the personal data (a zero-knowledge proof or zero-knowledge protocol is a method by which one party can prove to another party that a given statement is true, without conveying any information apart from the fact that the statement is indeed true). That enables the government to take the person’s inability to pay the fine into account, without compromising the individual’s privacy.

Several pilot projects have been completed in the field of healthcare. The team worked with the Dutch Healthcare Institute to develop a working prototype of a blockchain-based health locker, which can keep track of authorisations in the healthcare process. This means that if a patient can could indicate through an app, who can take care of what activities, when he or she is no longer able to do them, permanently or temporarily.

The team figured out that they could make it work technically. But there were concerns over tis compatibility with the existing legal framework.

So, the team connected the healthcare institute with a tech-focused law firm, and together they worked on what is now the first blockchain legal certificate. This means that the law firm will take a look at the prototype, make an assessment, and will indicate at what point the smart contract or the application doesn’t work in accordance with the law. Then the prototype can be adjusted to comply with regulations (changing regulations is a much longer process for obvious reasons).

In recent months, the team has been receiving more and more requests for blockchain projects, which also involve other emerging technologies. For instance, the team is working on a project to trial whether an object in a public space, such as a streetlight, can be an autonomous economic actor. It means that if the streetlight stops working, it can automatically send out a request for a micro-job. The request for repair can be taken up by an authorised supplier, and once the repair is completed, the system will automatically take care of the payment as well. A prototype streetlight is being developed.

In a subsequent presentation, Mr. Frans Rijkers (below), Senior Adviser at the Dutch National Office for Identity Data talked digital identity in the blockchain era. The Department has been working on prototypes for a ‘self-sovereign’ digital identity.

There are multiple governments ministries and agencies involved in dealing with identity, including the Ministry of the Interior and Kingdom relations, Ministry of Foreign Affairs/ Embassies, Ministry of Justice and local municipalities. The municipalities often act as the front-end where people go to get passports or update the government about changes in address etc.

Mr. Rijkers described the current system of adding people to the population registry as ‘digital paper’. Existing paper processes and certificates were digitised. But in today’s world, where citizens are moving and conducting transactions not just around the country, but around the world, the existing system is no longer adequate.

The idea behind the self-sovereign identity is to create a digital identity that citizens can use everywhere, not just in the Netherlands and not just for public services, but for all kinds of services within and outside the Netherlands.

“We’re looking at a system that gives you a digital identity that moves with you, that you can connect with your personal data wherever you are,” Mr. Rijkers said.

To explain how the identity might work, Mr. Rijkers gave the example of an individual buying alcoholic drinks. He/she has to show proof that they are over 18 years old. The ID card will have all kinds of data, including photograph, ID number, name, date of birth. But the only thing the person at the sales counter needs is a yes or no answer to whether the prospective buyer is over 18 years of age.

With the new self-sovereign identity, the person can check in with their phone, the data comes from the civil registry and returns a green or red (yes or no). Maybe the check-in could also be connected with the payment, so that entire transaction from age verification to payment happens in one step.

The onboarding has to be reliable and easy. So, a prototype has been developed by the National Office for Identity Data, Idemia and Tu Delft, where in a person can go to a municipal office and open an app developed in the prototype. The fingerprints and photograph from the passport are read and matched against the local biometrics i.e. the person’s actual fingerprint and photo.

Several use cases are being explored, such as designing an entirely new pension system where pension funds, employers and employees all keep their data in their own secure blockchains,

Another one is the granting of a loan from a municipality for making homes more sustainable. This latter could potentially be part of something much bigger, with residents having self-sovereign identity living in a smart home with its own digital identity, which is connected into a smart grid.

International collaboration

During the course, particularly of the second round of pilots earlier this year, two things happened. The first one was the realisation that a lot of the projects have an international dimension and require international collaboration. At the same time, there was significant interest from abroad.

The team decided to invest more in international collaboration because they saw that other countries were working on similar projects, trying to fix similar problems. The team is also in touch with the European Commission. Collaboration opportunities are also being explored with the World Bank and United Nations.

At the bilateral level, the Netherlands and Belgium are going to launch a book on all the Dutch and Belgian blockchain projects that have currently been launched. They have also been in touch with governments in Dubai and Estonia working on similar initiatives.

Mr. Hartog concluded his presentation expressing hope for further collaborations with forward-thinking countries like Singapore, cooperating in setting up projects, exhcnaging information and cross-testing each other’s prototypes.